New report shows workers were owed $4.7 million in unpaid wages, affecting their well-being and the economies of their local communities

RALEIGH (Jan. 9, 2012) – Documented wage theft cost North Carolina workers and their communities an estimated $4.7 million in 2011, according to a new report released this morning.

The North Carolina Justice Center report finds that when an employer does not pay a worker for the work she or he has performed, families struggle to make ends meet, and the decline in workers’ spending power means less demand for local businesses’ goods and services. A decline in spending leads to a decline in tax revenue for both state and local governments, which in turn provides fewer available resources to invest in economic recovery.

"Businesses that illegally withhold wages are depriving the state’s public structures of critical tax dollars needed to support a strong economy,” said Sabine Schoenbach, a policy analyst with the NC Justice Center and co-author of the report.

The NC Department of Labor’s Wage and Hour Bureau – which administers the North Carolina Wage and Hour Act – received 74,816 calls last year, the report said. This led to the investigation of over 3,000 employers – 1,651 of whom were cited – and the discovery that workers were owed $4.7 million in unpaid wages. Only $1.8 million of that total was collected, the report said, and according to the Bureau, over $1.5 million of the owed wages was uncollectable due to employer bankruptcies. As investigations are based on employee complaints, this data likely underestimates the occurrence of wage theft in North Carolina.

National and state-level data shows that workers in low-wage occupations are more likely to experience wage violations than higher-wage workers or workers in higher-wage industries. The report also finds that industries with the highest incidence of wage theft, such as retail and home health-care services, are also among the industries with the strongest job growth in North Carolina.

“In one of the worst economic downturns in modern times, a significant number of workers across the state are facing the prospect of working without pay,” said Alexandra Forter Sirota, director of the NC Budget & Tax Center, a project of the NC Justice Center, and co-author of the report. “If the state’s recovery is to be sustained, it’s critical that workers have well-paying jobs and are paid for their work.”